It will also list policy priorities for the National Democratic Alliance (NDA) that is seeking a return to office, two people aware of the budget-making process this year said.
These priorities include higher investment in skilling and education, creating more employment opportunities for women, mainstreaming the most backward districts in the country, building on the domestic demand resilience amid sluggish global trade, and climate action, they said.
On the first day of the budget session on Wednesday, Prime Minister Narendra Modi said the government will follow the convention of not bringing out a full budget ahead of the national election. Sitharaman’s budget on Thursday will give guidance and direction. The full budget will be presented after the polls, Modi said.
The interim budget will highlight India’s economic performance and fiscal health, and how targeted social transfers have helped in reducing income inequality and ‘multidimensional poverty’ measured on the basis of health, education and standard of living, said the first of the two persons cited above on condition of anonymity.
The promises delivered and future policy goals will be captured in the budget speech, said the second person, who also spoke on condition of not being named.
Two hundred and fifty million people coming out of multidimensional poverty in the past 10 years, ₹3 trillion so far being transferred to the accounts of farmers under the income support scheme launched in 2019, 40 million houses given to poor households in the past 10 years, and over 60 million people getting treated under the Ayushman Bharat health insurance scheme are examples of this, the second person said.
Queries sent to the spokespersons of the finance ministry and the Prime Minister’s Office on Tuesday remained unanswered till press time.
“President Droupadi Murmu’s assurance in Parliament on Tuesday that the government was working tirelessly to empower the youth, women, farmers and the poor—the four pillars of a developed India—signals the attention these sections of society are likely to get in the interim budget,” said A.K. Verma, director, Centre for Study of Society and Politics, an independent think tank.
Verma added that while the Centre is committed to inclusive development, implementation of the welfare schemes at the grassroot level requires more efficiency at least in some states.
Industry leaders expect the government’s thrust on capital expenditure to continue. “We expect the government to continue its support to capex-led projects, infrastructure improvements and production-linked incentives, as budgeted,” said Anil G. Verma, chief executive officer and executive director of Godrej & Boyce. “The government must take steps to accelerate the growth of the rural economy by providing suitable enablers. Spending on targeted welfare measures for the underprivileged needs to continue.”
Both persons quoted above said that the fiscal consolidation roadmap will be central to the interim budget. The finance minister had said in her budget speech for FY22 that the government would pursue a fiscal deficit lower than 4.5% of gross domestic product (GDP) by FY26. The fiscal deficit had shot up to 9.2% in the pandemic year of FY21, twice the level seen in the year before, and tempered thereafter.
EY chief policy advisor D.K. Srivastava said in a note issued on Tuesday that the fiscal deficit target of 5.9% of GDP for FY24 is likely to be met. This can be further reduced in incremental steps of 5.2%, 4.5% and 4% by FY27. Eventually, a fiscal deficit of 3% of GDP would have to be reached as per the FRBM (Fiscal Responsibility and Budget Management Act, 2003) target, he said.
While balancing the deficit, the interim budget is expected to continue its path to provide larger allocations to infrastructure sector ministries, particularly for building roads and highways, and adding speed to and expanding the railway network in the country.
The people cited above said allocations of both the road and railway ministries would be raised by at least 25% to well above ₹3 trillion. The infrastructure focus may also see the Centre’s capex spend rising once again from the ₹10 trillion budgeted for FY24, so that expenditure is maintained at 4.5% of GDP.
States would also be supported in the budget for building infrastructure through higher allocation under Special Assistance to States for Capital Investment, an interest-free, long-term loan scheme. The scheme, which has already sanctioned over 80% of its ₹1.3 trillion corpus in the first nine months of FY24, has created capital investment projects in states covering health, education, irrigation, water supply, power, roads and railways.
Women-specific schemes and the expansion of existing ones would also form part of the budget proposals. In November, the government had cleared a scheme to give drones to women self-help groups as livelihood support.
This year’s Republic Day celebrations saw nari shakti in full display and the budget is likely to continue with the government’s programme to add more women to the country’s labour force. The move would involve incentivizing enrolment of women while issuing advisories to government companies to increase their participation in the overall workforce.
The ministry of road transport and highways has already issued an advisory to encourage the participation of women in the workforce in highway construction.
The budget is also expected to increase the allocation for schemes meant for farmers. The farm sector has been impacted by erratic monsoon this fiscal year, leading to the statistics ministry forecasting a 1.8% output growth in FY24, down from 4% growth in FY23.
Another issue that would be addressed in the budget is further reducing the compliance burden for micro, small and medium enterprises (MSMEs), and helping them grow and contribute more to the economy. The government had in 2022 expanded the definition of MSMEs.
The budget may also look at ways to increase savings in the hands of ordinary citizens while acknowledging the contribution of wealth creators and creating a conducive environment for doing business in India. Green transition initiatives and programmes to address climate change would also form an important component of the budget.
The president in her speech also indicated that a grand vision is in the works to devise strategies to make India a developed nation by 2047. This vision may also be showcased in the budget that would look at programmes over a period of five years while also presenting a longer roadmap for the next 25 years to make India a developed country by 2047.
“For us, the vision of ‘Viksit Bharat’ is not limited to economic prosperity alone. We are giving equal importance to social, cultural and strategic strengths. Without them, development and economic prosperity would not be permanent. The decisions of the last decade have also been taken with this objective in mind. Many more steps are being taken keeping this goal in mind,” the president said in her speech to the joint session of Parliament.